2. It puts the withdrawals back in the SS and Medicare programs.

Without those withholdings, the social programs really would be bankrupt. We got the extra bucks on a temp basis and many Democrats were upset about stealing from SS. Now we're back to normal, or the new normal.

13. The US does borrow money to pay for SS and the deficit will be affected

Aside from the payroll tax cut, SS is currently running a small deficit each year (benefits plus cost > payroll tax receipts plus tax on benefits).

The payroll tax cut made that small deficit a large deficit. Both the small deficit and the larger deficit have to be paid for by the general fund, so indeed we have been borrowing to cover them. Last year's SS added over 150 billion to the money we had to borrow.

The restoration of the payroll tax rate will cut the SS deficit that must be paid for by the general fund to a low level - estimated less than 50 billion a year, but that gets larger until it it's projected to be pretty high each year in a decade or two.

The reason why SS went into deficit so much earlier than planned was high unemployment and crappy wages.

18. You say "The US does borrow money to pay for SS

and the deficit will be affected. Aside from the payroll tax cut, SS is currently running a small deficit each year (benefits plus cost>payroll tax receipts plus tax on benefits)." That is not really true the way I understand it. Yes costs are higher than receipts but the money is coming from the "SS Trust Fund". The reason it contributes to the deficit the government spent the "SS Trust Fund" and so since it is no longer there they have to borrow the money. They took our money through payroll taxes to pay for SS then spent it elsewhere, so now instead of paying back (the US Citizens) our principle plus interest like all the other creditors they want us to pay back the principle and interest ourselves by cutting SS.

20. ^ This. We don't have to transfer $ from the general fund this year like we have been

10. Upthread comments are confusing.

It increases revenue by $110 to 120 billion. That's revenue not collected now, so it's not like there's no change to total revenues.

The increased revenue goes to the SSA, not to the general fund. If FICA runs a surprlus, then the surplus goes to the general fund in exchange for the SSA's receipt of special issue securities. That's deficit neutral--it's intragovernmental borrowing and doesn't increase the deficit or decrease the deficit. It just alters cash flow. The the SSA ran a deficit in 2012 because revenues didn't cover expenses, so the SSA pulled money out of the trust fund. If the SSA ran a surplus in 2012 it was small, so most if not all of the increased revenue in 2013 will be spent on SS benefits in 2013.

However, when the FICA tax was reduced, the reduction was "bought out" by general revenue funds. In other words, the FICA tax holiday increased the deficit by the amount of the FICA tax reduction. Now that the FICA tax is reinstated, the general fund doesn't have to pay the SSA for the amount of the FICA tax reduction. That's one less expense and the deficit will decrease in 2013 from what it would have been. By precisely the amount that the reinstated FICA tax collects.

14. That is an excellent explanation. n/t

15. Thanks that explains it. That is the way I understood it was also. So the payroll tax cut

was paid out of the general fund and since we are in deficit the money was barrowed. So this year since we are paying the full FICA
tax it does actually reduce the deficit by $115-120 billion. To read some of the posts here on DU that money just fell from a tree.
I saw some posts the last couple days that thought it should be permanent.
I thought it was abad idea from the get go because the Rs could tie SS with the deficit.